At one time, the computer and electronics industries were dominated by large, vertically integrated firms such as IBM, Sperry and Univac. As illustrated by industry structure model 10 of FIG. 1, these monolithic companies included divisions that architected and designed electronic and computer systems; divisions that architected and designed general purpose or custom integrated circuits (chips); and divisions that developed semiconductor fabrication processes and, in turn, used these processes to manufacture chips. Out of necessity, the software tools and utilities required to effectively perform the various engineering tasks were developed and written by other groups internal to the particular firm. In conjunction with the above efforts, such firms typically developed and wrote their own software tools and utilities required to effectively perform the various engineering tasks. In addition, after several years of development, each firm had developed a large library of components and circuits designs required to build and integrate their proprietary systems and chips. Such circuit designs are commonly termed "intellectual property" blocks (IP Blocks).
In the recent past, because of the increasing level of technical complexity and the need to differentiate their system product offerings, the business model for computer and electronics industries has changed. As illustrated by industry structure model 20 in FIG. 1, many companies have become less vertically oriented, and have become specialized in particular business areas such as systems or semiconductors. For example, system houses have become oriented towards system integration and custom chip design to differentiate their systems, and have relied upon companies that specialized in fabrication for the production of custom chips. Companies such as Compaq Computer Corporation, and the like are generally regarded as system houses. Further, semiconductor houses have become oriented towards design and fabrication of chips that service a wide range of system applications, and have relied upon system houses to utilize these devices. Companies such as Advanced Micro Devices and National Semiconductor and the like are generally regarded as semiconductor houses.
In conjunction with recent efforts, such system and semiconductor houses have promoted the development of the electronic design and automation (EDA) tools industry and now rely upon EDA software tools, such as those provided by Cadence Design Systems, Incorporated, to develop their system and chip designs. The IP Block portfolios of both the system and chip houses have become very significant, but the ability to use these large portfolios in new designs or products that require the mix-and-match of one of more IP Block have not been overly successful.
More recently, because of the increasing pace of technical innovation, the increasing transistor density per chip and the ever increasing time-to-market requirements, the business model for computer and electronics industries continues to evolve at a rapid rate. As illustrated by industry structure model 30 in FIG. 1, companies are becoming even more specialized in particular business areas. There are now companies that specialize in system integration, or in chip design without fabrication, or in chip fabrication, or in EDA tools, or in the creation of mix-and-match IP Blocks.
In light of the fracturing of the vertically integrated business model, the number of companies that specialize in the creation or authoring of re-useable circuit and IP Block designs alone is increasing. As a result, the amount and types of IP Blocks developed by such companies is also increasing.
The ability to integrate tens and even hundreds of millions of transistors on a single silicon substrate is dramatically changing the way integrated circuits (ICs) are defined, designed and implemented. This technical paradigm shift is requiring the industry to re-use previously designed circuits or IP Blocks in their designs to meet the critical objectives such as time-to-market requirements demanded in consumer electronic markets, and the like.
In the future, no one company will realistically have the capabilities or IP Block portfolio to serve all the increasing needs of a particular electronics market segment. Thus, for custom semiconductor applications (system-on-a-chip "SOC" applications) the purchase or license of IP Blocks from third parties is becoming necessary.
Current methods of valuing IP Blocks are typically ad-hoc and may include intangible factors and unreasonable expectations. As an example, intangible factors may include emotional attachment, and the like; and unreasonable expectations may include charging the full cost of non-recurring-engineering (NRE) charges to the first IP Block licensee, or using a "rule of thumb" approach (IP Block price is 25% the value of the end-product), and the like.
Other methods for valuing IP Blocks using more conventional methods, such as net-present-value (NPV) analysis tend to undervalue the worth of a project. Also, NPV calculations can not correctly value the ability to delay a project.
As a result of the current lack or inadequacies of tangible ways to value IP Blocks, the negotiation processes are inefficient and protracted and the royalty structures are often irrational which ultimately causes missed market windows and opportunities. For example, with a project requiring IP Blocks from several different sources, the negotiation process, etc. must be repeated, possibly causing the project to be delayed or canceled. Further, each negotiation process may result in widely different and unexpected obligations.
Other drawbacks to current methods include that the determination of value for IP Blocks from one vendor typically has no effect on IP Block valuation from another vendor. Further, because royalty structures for IP Blocks can often be unpredictable, it is difficult for the industry to accurately estimate the cost-to-market of products requiring third party IP Blocks. For example, if one were to use the rule of thumb (25%) approach to a design, if four different IP Blocks are used in a design, all revenue is committed to the IP Block providers (4.times.25%=100%). Because, according to this method, no economic incentive is afforded to the manufacturer when 100% of its revenues are committed, the valuation of the IP Blocks must be adjusted.
Thus what is needed are methods and apparatus for efficiently determining which IP Blocks to incorporate into a SOC design. Further, what is needed are efficient and consistent methods for determining the value of IP Blocks.